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Commercial Lease | Advice for a Start-up Business | Jersey Business Legal Services | Parslows Jersey

Commercial Lease startup business Parslows Jersey Commercial Lease startup business – some initial advice for a Jersey Start-up Business

Starting a new business is exciting. You should always take advice as to areas you may not be familiar with, especially if you are thinking about taking on a commercial lease startup. All leases are complicated documents, potentially full of costly pitfalls, which an untrained eye may not pick up.

Please bear in mind that, as it is the Landlord’s building, they are perfectly entitled to say no to many, or all, of the suggestions we make, even if it appears completely unreasonable to do so.  In such circumstances, you need to weigh up the pros and cons of agreeing to the Landlord’s requirements or seeking alternative premises.

Commercial lease startup – Here are a few things to consider

Consider who will be the Tenant

You may want to start trading as a limited company, or indeed a partnership.  If so, make sure that the lease reflects this.

The guarantee

Be aware that most commercial landlords in Jersey will look for some form of third party protection, to guarantee performance of obligations under the lease.  This may be in the form of someone providing a guarantee or perhaps a deposit.

Rental

Jersey leases typically seek quarterly advance payments of rental. For a new start-up, you may wish to consider monthly payments, to assist with cash flow. Also, make sure consideration is given as to how the Landlord seeks to increase future rental.  Check the proposed terms as to whether this is to be JRPI, or in line with market or both.

Planning Consent – Use

You must always make sure that you are allowed to use the property for the use you intend. The Jersey planning department strictly regulates the use of all buildings in Jersey. It is not uncommon to discover tenants occupying property without appropriate use consent, which is an offence.

Service Charges

You need to consider service charges. This is a cost usually found in a commercial lease and allows the Landlord to recoup additional costs from you.  In general terms, Jersey leases will contain such a clause.  As such, consideration should be given to limiting your exposure to these costs.

Repairs

You should be careful to consider what responsibilities you have in relation to repairs and decoration.  Never underestimate how much it may cost to maintain and keep your office space in good repair.  It is always good practice to request a schedule of condition at the outset, so you can use this as a benchmark.

Works

You will need to consider what works are required.  All leases will have considerations as to what you can and cannot do regarding works at the premises.  Generally, tenants will need permission to carry out works, and this not only from the Landlord but also from Jersey planning and building control.  This will include partitioning.

While stating the obvious, you need to ensure that you have permission to carry out the works you plan (at least in principle) before you enter into the lease.

Rent Free Periods

If the property requires a fitting out, this can be time-consuming and may prevent you from using the space, notwithstanding having taking on the lease. As such, you should be considering asking the Landlord for a rent-free period.  Otherwise, you will have a burden without any income.

Right to assign

You should always ensure you have a right to assign the lease. That way, you know that you won’t have to find a way of keeping up with rental payments until the end of the lease for a Property you would rather be without.

Tenant’s Break Clause

Always consider a break clause in the lease.  It might be especially useful to have a right to break relatively early on, such as at the third anniversary of the lease, so that if the business really isn’t working out, at least you can get out of the lease with minimum fuss.  However, one should note that this may have an effect on rental levels; it will all depend upon negotiation.

Other

There are numerous other issues to consider, but this overview should give you an idea of some of the points to look out for.   Please remember that legal advice at the outset could save you a lot of money and angst in the future.

 

Carl Parslow | Partner | Jersey Business Legal Services

For advice, assistance or further information on Jersey commercial lease start up or commercial property please do not hesitate to call 630530 or email us on comprop@parslowsjersey.com


Parslows Jersey can help

We know that Jersey businesses have to carefully manage their budget. If we consider a client can resolve a matter without the services of one of our lawyers or if we can provide succinct advice in the right direction, we will say so. Whether we’re advising a Jersey start-up company or an established Jersey business, we always start and end with what is in your commercial interest.

Parslows Jersey Business Legal Services team is small enough to care but big enough to trust.


Please note that the information provided on this website is for general information purposes only and is designed to provide you with an outline of the legal services we offer.  Whilst we endeavour to ensure our information is correct and useful, we make no representations or warranties regarding the accuracy or completeness of the information offered.  Information on our website does not constitute legal advice and Parslows Jersey accepts no liability for any loss or damage arising out of, or in connection with, the information found in this website.  Please consult a lawyer at Parslows Jersey in the event that you require professional assurance that our information, and your interpretation of the same, is correct.
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